When The Bank Is An App — And Not The Bank’s

Banks historically, like grocery stores or gas stations, have always assumed that customers would just come to them. Banks are where consumers keep their money. Grocery stores are where consumers shop and buy their food. Gas stations are where consumers pull in and fuel up their cars.

Digital has changed much of that, by giving consumers more options for how and where they shop, and certainly how and with what they pay. As Green Dot Chief Revenue Officer Brett Narlinger told Karen Webster in a recent conversation, the same holds true for banks, particularly when it comes to millennial and Gen Z consumers.

“My two kids have never set foot in a bank,” Narlinger said, “and the question they will ask is why do I need to?”

Now granted, Narlinger noted, his “focus group of two” are still young, with simple financial needs. But those needs, he said, are fairly consistent with both those of their demographic, and an increasing number of consumers in general. Among the financial services customers want, he said, storing funds, saving funds, sending money and managing accounts are all list leaders. Additionally, consumers want to do it all via mobile with a trusted entity that offers FDIC insurance and fraud protection — and if they can have all of that without having to walk through the doors of a bank, even better.

Those evolving consumers, he said, can’t be counted on to come to the bank — which means that for Green Dot, the question has become how to bring the bank to those customers. Answering that question, he noted, has guided firm’s evolution over the last few years from a product firm specializing in prepaid cards into a platform business specializing in banking-as-a-service (BaaS) offerings for businesses that want to offer banking and related financial services to their customers.

“It’s about finding customers where they are and figuring out what customers are doing in their daily lives — who are their trusted brands, what are the top five apps they are opening daily?” Narlinger explained. “What are they doing today, and how do I meet them where they are, instead of trying to drag them to do something different? We’d rather show up where they are and offer them a banking account.”

And an account, he noted, that can better and more fully meet the needs of the customer who opens it.

Reaching Consumers In Context

For the customer, any customer, Narlinger noted, convenience is king and really the main driver of consumer decisions. What a customer is going to find convenient, however, will vary depending on the context in which they happen to be encountered. And from that starting point, he said, the challenge is to not just offer the customer what they’ve always gotten in terms of financial services — it is offering them that and then layering on something better.

A case in point, he said, was Green Dot’s partnership with Uber, which basically started with a single question: How do we make payments faster?

“We can do it every two weeks like everyone else in America, but that’s a little boring. So can we bring it down to a week, to a day, to immediately after every trip? And the answer is yes, we can do that,” Narlinger said.

The standalone usefulness of this, he said, is pretty obvious — it gives the driver near real-time control of their cash flow, so that drivers can set their driving schedules to meet their expense schedules. But the bigger story, he said, is the host of other services that can now be attached — an Uber debit card and account powered by Green Dot to spend those funds with, the ability to keep funds segregated for taxes, access to free ATMs, or access to Stash to create a 401K account.

“What it allows is for the driver to use their Uber debit card as their small business checking account,” Narlinger told Webster.

Another case in point starts with a customer — perhaps one without a banking account — being in line for a refund. “Once upon a time we would give you a pre-paid card to spend off. But Intuit came to us and said can we make this a full-service bank account that they can use to spend from, but they can also keep using if they choose.”

What Green Dot found when it made the offer for the first time during tax season last year, he said, is that tens of thousands of people signed up for — and continued using — the newly created bank accounts. Accounts, he noted, that came wired to Intuit’s entire suite of offerings, including Mint, so that customers had a way to better understand and budget their funds, as opposed to merely storing them.

“We see this demographic change of people who are very much focused on their phones, and app-based financial services that the banks have not done such a good job of attracting,” he said.

The banks, he said, are completely focused on building their own brand. Green Dot, he said, is focusing on how it can using banking services to empower other brands, and how to connect with customers through those branded relationships.

What’s Next

Traditional banking as we know it not going to disappear, Narlinger said. Some customers are always going to prefer the larger established banking brands — even those younger millennials and Gen Z customers who today are content to be wholly digitally-focused, but whose financial needs will get more complex with age.

But the emerging reality across financial services today, Narlinger told Webster, is that most of the things that a traditional bank can provide today — from checking accounts, to investments, to mortgages, to personal loans — can all be obtained without them. And that path is going to be very attractive to a large base of customers, particularly if firms like Green Dot can find ways to connect those services to other “trusted brands” that consumers interact with regularly.

That is starting today, he noted, with Green Dot’s BaaS partnerships with firms like Uber, Apple and Intuit. But there are “many more brands that also can tap into this ability” that Green Dot is working with to “find the recipe that allows them to propel themselves into this,” he said.

Brands have an incentive to find a way to do it, and do it right, he said, because financial services are “sticky services” that add a whole new layer to their loyalty offerings.

But, he noted, GreenDot is well aware that the biggest and most trusted brand in the world in 10 to 15 years might well be one that hasn’t been developed at all yet — and thus no one knows what that brand is or who it will be.

“So with that we are thinking about ways to open up our platform in constructive ways so that we are making it really accessible to developers,” he said. “We want to be a wide open sandbox to pull from — so that even if I don’t know what firm will be successful we’ve built an open environment to let them in.”

The journey to being an open platform offering up banking-as-a-service for brands known (and unknown) has been a big one — particularly for a firm best known for being a prepaid card company. But, Narlinger said, for Green Dot it was the obvious path forward in a world where consumers are really rethinking their view of financial services — and what types of places they want to access them from. Green Dot doesn’t want to guess which places those will be, when it can simply make it possible for any place to be that place and let the customer decide.

“I always tell people, there is really only one way to win a horse race — which is to bet on every horse.”